How Much Does an LLC Cost in Texas? (Filing Fees Breakdown)

Delina Chantel Yasmeh
Published by Delina Chantel Yasmeh | Author
Last updated: March 31, 2024
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The cost of forming an LLC in Texas may vary based on several factors, like the type of LLC and the filing method chosen.

Having helped numerous entrepreneurs navigate the intricacies of starting a business, I conducted thorough research to determine the costs of forming an LLC in Texas.

Together with industry professionals in the state, we examined the filing fees and regulations to provide you with a comprehensive breakdown.

Quick Summary

  • An LLC in Texas costs $300 to file the Certificate of Formation. 
  • Additional expenses when forming a Texas LLC include registered agent service, business licenses, annual reports, franchise tax, and other legal documents. 
  • According to Small Business Administration data, 5.0 million small business employees, which constitutes 44.3 percent of Texas employees, highlight the significant role of small businesses in the state's employment sector.
  • I always advise new entrepreneurs to compile a complete set of their company documents for business, legal, and other purposes.


Cost to Start an LLC in Texas

A woman listing out the necessary expenses for Texas LLC

When opening a limited liability company in Texas, you must pay for mandatory, as well as optional fees, which include the following:

1. LLC Formation Filing Fee ($300 - Mandatory)

The cost for filing the Certificate of Formation is $300, which is paid to the Texas Secretary of State only once. Additionally, a certified copy of the Certificate of Formation can be obtained for an additional fee of $30.

Without it, the business is not legally recognized in the state, and the LLC formation process can't be completed.

Expedited service is available for a fee of $25. The state will process and approve your documents within 12–14 business days.

However, I prefer filing online since it’s more convenient and the processing period only takes 10 to 15 business days.

2. Registered Agent Service Fee ($80-$300 – Optional)

Texas law requires all LLCs to have a registered agent. When I was scouting for a registered agent, I learned that the typical range for employing the services of one costs between $80 and $300 per year.

A Texas registered agent or a registered agent service ensures your company files, pays all required taxes, and receives service of process on behalf of your LLC.

This role becomes increasingly critical as, according to Small Business Administration data, 5.0 million small business employees, constituting 44.3 percent of Texas employees, underline the substantial role small businesses play in the state's employment landscape [1].

Note: You can be your own registered agent without hiring a third-party agency.

3. Name Reservation Fee ($40 - Optional)

Texas imposes a nominal fee of $40 for reserving a name for an LLC. The fee ensures that your chosen name remains available during the registration process.

Before reserving a business name, I advise clients to check if it’s still available and help them ensure their preferred name complies with state naming guidelines.

See our article on how to change an LLC name in Texas.

"Previously, the cost of establishing a business in Texas could include expenses for publishing a notice in a local newspaper. But the mandate to publish such notices as part of state fees was abolished in 2003."

-Jon Morgan, Co-Founder & Chief Editor of Venture Smarter

Expenses Following the Approval of Your LLC

Writing signature for amendment of organization

Once the LLC has been approved, you may have to shoulder the following expenses:

1. Business License (Depending on Line of Business - Mandatory)

You'll need different types of permits and licenses to operate your business legally in Texas, but the requirements and costs will vary depending on your location [2].

Standard business operating licenses or specialized licenses typically range from $15 to $30 for lower-end fees. However, certain businesses may face relatively higher fees.

I had a colleague in the medical industry and had to obtain a professional license to legally operate in the state.

2. Annual Report ($0 –  Mandatory)

There is no fee for the annual report, but keep in mind that it has to be submitted through the Texas Comptroller of Public Accounts no later than May 15th. If you fall behind with the Texas LLC annual report, there is a $50 fine.

When filing an LLC annual report with the state, I was able to do it through the e-service portal on the Texas Secretary of State's website.

3. Annual Franchise Tax (Mandatory)

In Texas, the Annual Franchise Tax for LLCs is calculated based on annual receipts. Businesses with receipts less than $1.18 million are exempt from the franchise tax.

However, for businesses with an annual receipt of $1.18 million to $10 million, a franchise tax rate of 0.375% applies. The maximum tax rate for LLCs in Texas is 0.75%.

This taxation comes in the context of employment in Texas, which has grown at an annualized rate of 2.2% over the five years to 2023, underperforming the national average of 3.7%, as per Ibis World statistics [3].

In Texas, the cost of a professionally drafted LLC operating agreement ranges between $500 and $1,000. You can also avail templates from LLC formation services online, which cost around $100 to $200.

I always advise clients to seek legal advice and let a lawyer draft an operating agreement on their behalf to ensure the document’s legality.

It costs $0 to get an EIN in Texas. You can apply for it via the IRS website. The application is straightforward and can be completed online.

Whenever clients register their LLCs in the state, I advise them to apply for an EIN since it’s a requirement for opening business bank accounts and hiring employees.

Related Articles:

FAQs

Is An LLC in Texas Subject to Federal Tax?

An LLC in Texas is subject to federal income tax. A single-member LLC is treated as a sole proprietorship and reports its federal taxes (income and expenses) to the IRS on Form 1040. A multi-member LLC reports its income and expenses on Form 1065.

How Much Does It Cost to Open a Business Bank Account For a Texas LLC?

It costs $0 to open a business bank account for a Texas LLC. However, some banks demand an opening deposit ranging from just a few dollars to a few hundred dollars.

Can an LLC have a DBA in Texas?

An LLC can have a DBA in Texas. However, the Texas LLC filing fee for a DBA will cost a general fee of $25 but depends on the county where you form an LLC.

References:

  1. https://advocacy.sba.gov/wp-content/uploads/2023/11/2023-Small-Business-Economic-Profile-TX.pdf
  2. https://gov.texas.gov/uploads/files/business/Texas_Licenses_Permits_Guide.pdf
  3. https://www.ibisworld.com/united-states/economic-profiles/texas/

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